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Inclusion of B-BBEE Verification Certificates in Tenders.

It has long been established that a B-BBEE Verification certificate is used in tenders to substantiate the B-BBEE rating of the bidder. However the inclusion of such certificate and the status level of the bidder has never been used as an exclusionary factor when tendering.

In the case of Rodpaul Construction CC t/a Rods Construction v EThekwini Municipality (10075/13) [2014] ZAKZDHC 18 (2 June 2014): Rodpaul submitted a tender without a B-BBEE Verification Certificate, instead he included a letter from a B-BBEE verification service stating that it was in the process of conducting the evaluation and the Certificate will be completed sometime in 2012. When the Certificate was ready Rodpaul submitted it to the Bid Evaluation Committee (BEC) and the Bid Adjudication Committee, after the time for submissions but before the tenders were considered.

The BEC did not consider the Certificate received late from Rodpaul and subsequently awarded the tender to another Company. The BEC stated that the submission of the B-BBEE Verification Certificate was a pre-requisite and without it, Rodpaul could not claim the preference points.

Rodpaul brought an application to the Durban High Court seeking to set aside the award stating that the regulations did not prescribe a time for when the Certificate must be submitted to the BEC, as such the pre-requisite of submitted the Certificate with the Tender, in the Municipality’s Notice to Tender, was in conflict with the Regulations.

Rodpaul further stated that he submitted the Certificate before the evaluation of the tenders and as such the certificate had to be considered and had this been done, he would have scored higher than the Company that received the tender.

The EThekwini Municipality submitted that its Notice to Tender had specified that the tender evaluation will be based on the Broad-Based Black Empowerment Act and for a bid to be in compliance with the Act, the Municipality needed to have sight of the Certificate.

The Court wholly disagreed with Rodpaul’s approach. The court stated that: “even treatment of all bidders and complying with procedural formalities ensures fairness to participants in the bid process, enhances efficiency, optimises the outcome and guards against corruption.” It further stated that the imposition of time-frames in the bidding process allows for fair competition. The court held that although the regulations do not prescribe a time-frame, the inclusion of time-frames by the EThekwini Municipality allows for the compliance of the law and it instils clarity and predictability. The court held that the acceptance of Rodpaul’s Certificate after the date of submission of the Tender would have compromised the integrity of the process. The court dismissed the application.

In Rodpaul’s case the court had to use its discretion as the law was silent on this issue. However on the 20^th January 2017, the position changed and Regulation 4 of the Preferential Procurement Regulations, 2017 was introduced.

Regulation 4 provides that an organ of state may now specify, in its Notice to Tender, that a B-BBEE Certificate and a minimum B-BBEE status level is a pre-qualification before a tender may be considered acceptable.

In essence this means that if the submission of a B-BBEE Verification Certificate is stipulated in the Notice to Tender as a pre-qualification, then a tender submitted without one, will automatically be considered as incomplete, therefore unacceptable. However if the submission of the Certificate is not a pre-requisite, the Tender is valid but when being evaluated, it will not receive preferential points.

Contributor: Noluthando Dlamini (Associate) (Pietermaritzburg Office) (Public Law)

E-mail: noluthandod@tmj.co.za

Tel: 033 341 9100